If you contributed the minimum payments to a KiwiSaver scheme for the past three years, and have never bought a home before, you could be able to leverage your retirement savings. With these, you may be able to take advantage of the KiwiSaver first home withdrawal or get approved for a First Home Grant. Many first-time home buyers know there are government benefits available through their KiwiSaver, but aren’t sure how it works. Below, we give an overview of how you can use KiwiSaver to help with getting your first home.
What is KiwiSaver?
Kiwisaver is a voluntary super fund designed to help New Zealanders save for retirement. While your employer is required to contribute a 3% minimum of your gross income, you can voluntarily add 3-10% of your before-tax earnings. A KiwiSaver provider of your choice will then invest your KiwiSaver funds on your behalf. If no provider is chosen, it will go into one of nine default schemes.
What is the KiwiSaver first home withdrawal?
Normally, you can’t touch your KiwiSaver funds until you turn 65. However, if you’re taking money out of your fund for your first home, you may qualify to use it ahead of time. The KiwiSaver first home withdrawal allows you to withdraw funds from your KiwiSaver early if you are making a deposit on your first home. If you’ve owned a home before, but not currently, you may still be able to use your first home withdrawal if you have never used it before.
There is no set limit on the amount you can take out of your KiwiSaver for a first home withdrawal. But every scheme provider has different rules and policies, so contact your individual plan for more details. You will want to get an estimate of exactly how much you can take out so that you can get a conditional pre-approval for a home loan.
What are the rules for KiwiSaver first home withdrawal?
- You are a New Zealand resident
- You have been contributing to a KiwiSaver for at least three years
- The property you are buying is in New Zealand
- You cannot take out any super funds transferred from an Australian employer
- This must be your first KiwiSaver withdrawal to buy property
- You must leave at least $1,000 in your KiwiSaver account
- You cannot currently own a home
- If you are buying a home with a partner or co-owner, you can combine your withdrawals to buy your home, assuming you both independently qualify
Is a KiwiSaver first home withdrawal application complicated?
Not really, but you’ll need to have all the required documentation and follow your provider’s policies for approval. At minimum, you will need:
- A copy of your driver’s license or passport
- Mail (such as a bill) addressed to you for your proof of residence
- Tax returns for the past several years (if applicable)
- Your KiwiSaver statements
- Your bank statements
- Recent pay slips
What is a KiwiSaver First Home Grant?
A KiwiSaver First Home Grant (previously called HomeStart) is a Kāinga Ora initiative that helps with a first home deposit. While it can be financially helpful for some first-time buyers, they are only available for homes under certain price points. In Auckland and Queenstown, the maximum you can spend on a property to receive the First Home Grant is $650,000. This is reduced to $550,000 in other major cities, and up to $500,000 in regional areas.
To qualify for the KiwiSaver First Home Grant, you must meet the below requirements:
- Be a New Zealand resident who is 18 years or older
- You don’t currently own any property
- You plan to live in your new property for at least six months (or up to three years for some types of borrowers and properties)
- As of April 2021, you have earned less than $95,000 over the last 12 months for a single buyer, and $150,000 over the last 12 months for joint buyers (both before tax)
- You have contributing the minimum payments to your KiwiSaver for three consecutive years
- You have ensured that the house or land you’re buying meets other requirements from regional grants and/or your government-backed lender.
- You have a 5-10% deposit
How much can I get from the KiwiSaver First Home Grant?
- With a KiwiSaver First Home Grant, you may receive anywhere from $3,000- $10,000
- Generally, you can get $1,000 per consecutive year that you have contributed to your KiwiSaver (for up to five years)
- Benefits are doubled to $2,000 per year if you are buying a development property
- If you’re buying your first property with someone else, the maximum you can get is $10,000 for a home or $20,000 for a development property
How to apply for the KiwiSaver First Home Grant
To apply for a KiwiSaver First Home Grant, the first thing you should do is visit the government website for more detailed information on your eligibility.
If you believe you meet the requirements, you will need to set up an Inland Revenue Department online account for easier access to the required documentation. Once you have everything you need in terms of the paperwork, you can then apply for pre-approval online at the Kainga-Ora website. If you are actively house hunting, it’s best to get pre-approval first so you know how much you can spend. Pre-approval can last up to six months, giving you plenty of time to find the right property. Applications generally go through processing in about five business days.
As always, consult your individual scheme provider or complying fund before taking money out of your KiwiSaver as a first home buyer withdrawal or applying for the KiwiSaver First Home Grant.
Buying your first home with your KiwiSaver?
A knowledgeable mortgage advisor can help you figure out where to start. At Mike Pero Mortgages, we love watching people experience the thrill of buying their first home. We’re always happy to walk you through the loan approval process and help you navigate your first-time buyer benefits. Call Mike Pero Mortgages today on 0800 500 123, or contact your local Mike Pero Adviser.